StaFi (FIS) Soars Over 64% as New Proposal Goes Live

FIS, the native token of the liquid staking derivatives (LSD) network StaFi Protocol, has surged by more than 64% in the last 24 hours after a new proposal to alter StaFiHub’s validator program went live.

According to data from CoinMarketCap, news of the proposal triggered an 85% price rise for FIS, with the asset’s value jumping from $0.144 to $0.267 within an hour. By the time of writing, FIS had corrected slightly and was trading at $0.228, with a market cap of $25.68 million and a 24-hour trading volume of $49.08 million. 

What is the StaFi Protocol?

StaFi claims to be the first decentralized finance (DeFi) protocol to unlock the liquidity of staked assets. Initially launched as an LSD chain for Proof-of-Stake (PoS) networks, StaFi recently unveiled a Liquid Staking as a Service (LSaaS) offering, enhancing its infrastructure. The launch of an LSaaS offering is part of a broader upgrade to StaFi 2.0, which will strengthen the protocol’s technology and functionality.

Before the vision for StaFi 2.0 was formed, the chain only enabled users to stake PoS tokens to receive reward-Tokens (rTokens), which can be traded while still earning staking rewards, in return. About two years ago, the StaFi team launched StaFiHub, a parallel chain built using the Cosmos software development kit (SDK), designed to support decentralized applications (DApps) for liquid staking solutions and third-party developers.

StaFiHub offers its services using the Inter-Blockchain Communication (IBC) Protocol and serves as the application layer of the StaFi Chain. The network releases liquidity for tokens staked in other chains in the Cosmos ecosystem. Cosmos is a network that connects different blockchains by enabling secure and interoperable communication between them.

The launch of StaFiHub brought significant changes to the StaFi Chain. The parallel chain enhanced the protocol’s offerings while remaining connected to the parent network through a cross-chain bridge. Staying connected to the Cosmos ecosystem also led to the creation of multiple rTokens, including FIS, which could be transferred to other chains through IBC.

Transitioning Into a Permissioned Model

Recent developments on StaFi led to the need to sunset StaFiHub as the whole network migrates to version 2.0. To do this, rTokens on StaFiHub are being migrated to Neutron, a cross-chain smart contract platform for DeFi applications, and will be restructured within the LSaaS framework. 

The StaFi team said that rToken migration has started, but StaFiHub validators are still operational and continue to receive FIS rewards. The ongoing issuance of FIS is contributing to sustained pressure and unnecessary inflation on the asset, even as economic activity on the network has been decreasing.

To reduce FIS emissions and accelerate StaFiHub’s migration to StaFi 2.0, the team wants to transition the network’s validator set to a permissioned model operated by the StaFi core team; hence, the proposal. 

Permissioned validator sets allow only authorized individuals or entities to approve transactions via specialized node operators. This model contrasts with the decentralization principles of the Web3 space but offers higher security, stability, and performance. 

If the proposal to transition StaFiHub’s validator set to a permissioned model passes, unstaked assets will be offboarded, and the team will discontinue FIS staking rewards. Also, the remaining FIS allocated for validator incentives will be returned to the StaFi decentralized autonomous organization (DAO) treasury. The team will also implement a controlled phase-out of the validator set over one year.

Voting for the proposal started on April 22 and will end on April 28, 2025.

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